SAP subsidiary TommorowNow is in trouble. A lot of it. In a late-night announcement, seemingly designed to be lost among the boom of Independence Day fireworks, SAP admitted TN had inappropriately downloaded files from its competitor Oracle.

Oracle filed suit against SAP this past Spring, after the company discovered TN was accessing Oracle databases with former customer passwords and downloading proprietary information. TN used that information to provide the same level of service Oracle provided, at half the price.

SAP is defending its subsidiary by saying that TN customers authorized them to download files on their behalf, a defense Eric Goldman calls the "proxy defense" that's doomed to fail.

"Oracle can control the manner and means by which people access its servers," writes Goldman, "so even if it permits its customers to access the site, that permission isn't automatically extensible to third parties acting on the customers' behalf. Indeed, Oracle expressly precluded such behavior in some cases."

SAP has been noticeably compliant with most of the claims even as it defends itself in court against the charges. The company set up a website about the lawsuit where those following the case can get information.

Though he wished he somebody'd called him before filing a lawsuit, Henning Kagermann, CEO, SAP AG, made his apologies. “Even a single inappropriate download is unacceptable from my perspective. We regret very much that this occurred,” he said.

“I want to reassure our investors, customers, partners and employees that SAP takes any departure from the high standards we set for all of our businesses very seriously, regardless of where it occurred or how confined it may be.

"When I learned what happened, I promptly took action to strengthen operational oversight at TomorrowNow while assuring that we maintain excellent service for TomorrowNow’s customers going forward.”

It may not turn out that well for them, though. TN is losing business already, SAP's most likely going to have to write out a pretty big check to Oracle, and there's a good possibility some suits are going to find themselves in jail.

SAP TomorrowNow Oracle